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This article investigates why corporations make environmental disclosures in their financial reports, addressing two major theories utilized in related accounting research. It also describes how economic theories of stock-market behavior are used to evaluate whether the market values corporate environmental information contained in financial reports. These two streams of research are related to newer, potentially productive avenues of research related to environmental financial reporting and financial markets. Research into the extent of corporate environmental disclosure shows that, while a...

This article investigates why corporations make environmental disclosures in their financial reports, addressing two major theories utilized in related accounting research. It also describes how economic theories of stock-market behavior are used to evaluate whether the market values corporate environmental information contained in financial reports. These two streams of research are related to newer, potentially productive avenues of research related to environmental financial reporting and financial markets. Research into the extent of corporate environmental disclosure shows that, while a number of environmental disclosure regulations are in place, problems with oversight, monitoring, and enforcement by the agencies responsible for implementation has led to relatively low levels of environmental disclosure in corporate financial reports. Recent trends in environmental disclosure and reporting practices suggest a largely increasing number of stand-alone reports, which include social, environmental, and economic/financial information reflecting what is referred to as triple bottom line reporting.